8 ms·

Not claiming I have a panacea here, but wouldn't either a more aggressive minimum wage or a basic minimum income raise the ability for more people to act on the

Not claiming I have a panacea here, but wouldn't either a more aggressive minimum wage or a basic minimum income raise the ability for more people to act on the desire to buy? I assure you the demand for tons of stuff exists, but the means to buy it does not. Back in 2013, HuffPost ran an article pointing out that had minimum wage kept up with inflation, it would be $10.50/hr and actually more like $21 if it had kept up with productivity growth [0]. That, of course, assumes that the original minimum wage rate was set reasonably, but I can promise you that few people, save some well-educated counter-cutlurists, can live on $7.50/hr these days. And even if they could, they wouldn't really be spurring demand in the greater economy. [0] http://www.huffingtonpost.com/2013/02/13/minimum-wage-productivity_n_2680639.html http://www.huffingtonpost.com/2013/02/13/minimum-wage-produc...

jganetsk 11y ago
A basic minimum income is the right answer, but not for the purpose of increasing demand. People demanding to increase demand is utterly silly. We have succeeded as a civilization: we are providing far more than we could ask for. In the big picture, what does increasing demand really do for us? But there's definitely a need to reduce poverty. And there's a need to allow ourselves to stop working as hard as we do. A basic minimum income would help accomplish these things. Where do we get the money from? It doesn't really matter, there's plenty of it sloshing around. As Charlie Munger said: “This has basically never happened before in my whole life. I can remember 1½ percent rates. It certainly surprised all the economists. It surprised the people who created the life insurance industry in Japan, who basically all went broke because they guaranteed to pay a 3% interest rate. I think everybody’s been surprised by it, including all the people who are in the economics profession who kind of pretend they knew it all along. But I think practically everybody was flabbergasted. I was flabbergasted when they went low; when they went negative in Europe – I’m really flabbergasted. How many in this room would have predicted negative interest rates in Europe? Raise your hands. [No hands go up]. That’s exactly the way I feel. How can I be an expert in something I never even thought about that seems so unlikely. It’s new territory…. I think something so strange and so important is likely to have consequences. I think it’s highly likely that the people who confidently think they know the consequences – none of whom predicted this – now they know what’s going to happen next? Again, the witch doctors. You ask me what’s going to happen? Hell, I don’t know what’s going to happen. I regard it all as very weird. If interest rates go to zero and all the governments in the world print money like crazy and prices go down – of course I’m confused. Anybody who is intelligent who is not confused doesn’t understand the situation very well. If you find it puzzling, your brain is working correctly.”
- refurb 11y ago
  We have succeeded as a civilization: we are providing far more than we could ask for. Really? There is nothing you could improve in the human condition that would make life better?
  - kuschku 11y ago
    For those people with an excess of capital, with current knowledge of science, no. For the people with no excess of capital, though, we can improve the situation.
  - TeMPOraL 11y ago
    Of course there is. The point is, we've reached the stage of our advancement when, on aggregate, we produce more than we actually need. Our current issues are with distribution of what is being produced.
    - refurb 11y ago
      Not sure that I would agree there. What if the "excess" production funds a cure for cancer? What if that cure requires additional resources? The world isn't static.
      - EvanPlaice 11y ago
        I'll try by best not to sound like a raging sociopath here. In pure economic terms, curing cancer has little benefit to society. Cancer is not any one specific disease. It's a class of diseases, of which there are thousands (or more) of variants. We may stumble on some amazingly technologically advanced cure to some forms of cancer but the more rare the form, the less likely there will ever be a treatment. Most people get upset when you talk about humans as assets because we're indoctrinated at a very young age to value human life above all else. If you can, in fact, speak about humans in economic terms of supply/demand. We have an overabundance of people, and nothing useful to give them jobs to do. It's like the current oil market. Oil was highly valued due to the inelasticity of supply. Now that there is a glut of over supply and inelasticity greatly reduced, the value has dropped dramatically. The supply of humans capable of doing useful work used to be somewhat constrained. Now, we have more people than can be reasonably assigned to do useful work without essentially paying them to warm a chair. Yet, like the oil market nothing is stopping people from having more kids and increasing the supply. The government even directly subsidizes people for the number of children they have due the persistent belief that GDP is directly dependent on population. People can increase their value proposition by earning many degrees and racking up huge amounts of debt but, unless you're going to work in the industries that are thriving, it's a buyers market for employers. Business owners have their choice pick of the herd. They can keep wages as low as possible and skim more cream off the top because there's a line out the door of people waiting the replace a worker who quits. Who knows, maybe this is just the supply limit (ie in environmental science terms) as it applies to the human population. Poverty and misery is the expected result of making too many people before we can come up with enough useful reasons to sustain them.
asift 11y ago
That often cited minimum wage statistic also just so hapens to start at a time when minimum wage was near it's all time high on an inflation adjusted basis. Why do you suppose that is? A basic income is a far better solution than our current mess of bureaucratic welfare programs that are both inefficient and rife with harmful unintended consequences for those they intend to support. Milton Friedman's "negative income tax" was intended to be a basic income until it was bastardized into the EITC.
- reddytowns 11y ago
  One thing I don't understand about basic income is how to deal with children. If the parents get the basic income of a child, then that will incentivize some people to have more kids simply to get more money. If you don't give basic income for kids, then people with a lot of kids won't be able to live. Of course, you can adjust the amount between the too extremes of full basic income and no basic income for kids, but just because you have a target standard of living and give the parents money to meet that for the kids, doesn't mean the parents aren't going to turn around and spend that money on themselves. They might not care that their kids are in poverty as long as they get the drugs/alcohol/new car/fashionable clothes or whatever. As you already stated, bureaucratic welfare programs don't work, so what is the solution here? I've never seen this discussed, and it seems like a major oversight of the basic income proponents.
  - nitrogen 11y ago
    Provide free contraceptives alongside the free money.
  - pavedwalden 11y ago
    I've never bought the idea that welfare recipients would bear children strategically. Surely after the first child, they'd realize that this was a difficult way to increase their top-line income. Not sure where I'd look for data on this, but my gut feeling is that poor people who have a bunch of poorly-cared-for-children get pregnant because they're bad at planning ahead, not because they've been inventivized by a subsidy.
ArkyBeagle 11y ago
Chances are that land rents and goods prices would adjust to soak up the gains in wages. No guarantees there, though.
- manyoso 11y ago
  You index it to inflation of course.

jganetsk 11y ago

A basic minimum income is the right answer, but not for the purpose of increasing demand. People demanding to increase demand is utterly silly. We have succeeded as a civilization: we are providing far more than we could ask for. In the big picture, what does increasing demand really do for us? But there's definitely a need to reduce poverty. And there's a need to allow ourselves to stop working as hard as we do. A basic minimum income would help accomplish these things. Where do we get the money from? It doesn't really matter, there's plenty of it sloshing around. As Charlie Munger said: “This has basically never happened before in my whole life. I can remember 1½ percent rates. It certainly surprised all the economists. It surprised the people who created the life insurance industry in Japan, who basically all went broke because they guaranteed to pay a 3% interest rate. I think everybody’s been surprised by it, including all the people who are in the economics profession who kind of pretend they knew it all along. But I think practically everybody was flabbergasted. I was flabbergasted when they went low; when they went negative in Europe – I’m really flabbergasted. How many in this room would have predicted negative interest rates in Europe? Raise your hands. [No hands go up]. That’s exactly the way I feel. How can I be an expert in something I never even thought about that seems so unlikely. It’s new territory…. I think something so strange and so important is likely to have consequences. I think it’s highly likely that the people who confidently think they know the consequences – none of whom predicted this – now they know what’s going to happen next? Again, the witch doctors. You ask me what’s going to happen? Hell, I don’t know what’s going to happen. I regard it all as very weird. If interest rates go to zero and all the governments in the world print money like crazy and prices go down – of course I’m confused. Anybody who is intelligent who is not confused doesn’t understand the situation very well. If you find it puzzling, your brain is working correctly.”

refurb 11y ago
We have succeeded as a civilization: we are providing far more than we could ask for. Really? There is nothing you could improve in the human condition that would make life better?
- kuschku 11y ago
  For those people with an excess of capital, with current knowledge of science, no. For the people with no excess of capital, though, we can improve the situation.
- TeMPOraL 11y ago
  Of course there is. The point is, we've reached the stage of our advancement when, on aggregate, we produce more than we actually need. Our current issues are with distribution of what is being produced.
  - refurb 11y ago
    Not sure that I would agree there. What if the "excess" production funds a cure for cancer? What if that cure requires additional resources? The world isn't static.
    - EvanPlaice 11y ago
      I'll try by best not to sound like a raging sociopath here. In pure economic terms, curing cancer has little benefit to society. Cancer is not any one specific disease. It's a class of diseases, of which there are thousands (or more) of variants. We may stumble on some amazingly technologically advanced cure to some forms of cancer but the more rare the form, the less likely there will ever be a treatment. Most people get upset when you talk about humans as assets because we're indoctrinated at a very young age to value human life above all else. If you can, in fact, speak about humans in economic terms of supply/demand. We have an overabundance of people, and nothing useful to give them jobs to do. It's like the current oil market. Oil was highly valued due to the inelasticity of supply. Now that there is a glut of over supply and inelasticity greatly reduced, the value has dropped dramatically. The supply of humans capable of doing useful work used to be somewhat constrained. Now, we have more people than can be reasonably assigned to do useful work without essentially paying them to warm a chair. Yet, like the oil market nothing is stopping people from having more kids and increasing the supply. The government even directly subsidizes people for the number of children they have due the persistent belief that GDP is directly dependent on population. People can increase their value proposition by earning many degrees and racking up huge amounts of debt but, unless you're going to work in the industries that are thriving, it's a buyers market for employers. Business owners have their choice pick of the herd. They can keep wages as low as possible and skim more cream off the top because there's a line out the door of people waiting the replace a worker who quits. Who knows, maybe this is just the supply limit (ie in environmental science terms) as it applies to the human population. Poverty and misery is the expected result of making too many people before we can come up with enough useful reasons to sustain them.

asift 11y ago

That often cited minimum wage statistic also just so hapens to start at a time when minimum wage was near it's all time high on an inflation adjusted basis. Why do you suppose that is? A basic income is a far better solution than our current mess of bureaucratic welfare programs that are both inefficient and rife with harmful unintended consequences for those they intend to support. Milton Friedman's "negative income tax" was intended to be a basic income until it was bastardized into the EITC.

reddytowns 11y ago
One thing I don't understand about basic income is how to deal with children. If the parents get the basic income of a child, then that will incentivize some people to have more kids simply to get more money. If you don't give basic income for kids, then people with a lot of kids won't be able to live. Of course, you can adjust the amount between the too extremes of full basic income and no basic income for kids, but just because you have a target standard of living and give the parents money to meet that for the kids, doesn't mean the parents aren't going to turn around and spend that money on themselves. They might not care that their kids are in poverty as long as they get the drugs/alcohol/new car/fashionable clothes or whatever. As you already stated, bureaucratic welfare programs don't work, so what is the solution here? I've never seen this discussed, and it seems like a major oversight of the basic income proponents.
- nitrogen 11y ago
  Provide free contraceptives alongside the free money.
- pavedwalden 11y ago
  I've never bought the idea that welfare recipients would bear children strategically. Surely after the first child, they'd realize that this was a difficult way to increase their top-line income. Not sure where I'd look for data on this, but my gut feeling is that poor people who have a bunch of poorly-cared-for-children get pregnant because they're bad at planning ahead, not because they've been inventivized by a subsidy.

ArkyBeagle 11y ago

Chances are that land rents and goods prices would adjust to soak up the gains in wages. No guarantees there, though.

manyoso 11y ago
You index it to inflation of course.